Redbox Could Take On Netflix in Streaming

Redbox (s CSTR) could get into the online video streaming business, if a recent survey is any indication. According to High-Def Digest, Redbox has reportedly asked customers if they would be interested in a streaming service that would put the kiosk rental company in direct competition with industry leader Netflix (s NFLX).

The survey asks Redbox users if they would pony up $3.95 for a video subscription service that would include unlimited online streaming and four kiosk rentals a month. Since Redbox rentals typically cost$1 a day, that would basically mean that they would get free streaming along with their four rentals.

The price sounds right, especially when one compares it to what Netflix charges. Currently, the cheapest Netflix plan — which includes unlimited streaming and one DVD-by-mail disc out at a time — runs \$9 a month, so Redbox would be charging less than half of what Netflix subscribers currently pay.

Even with a low price point, a Redbox streaming service will face some serious challenges. For one thing, Netflix has a pretty large head start in the streaming business, particularly in the area of content acquisition. Since launching its Watch Instantly streaming service in early 2007, it has amassed more than 17,000 video titles in its streaming content library. As a new service, any competing Redbox service is likely to have a limited catalog of content in comparison.

Netflix also has a large — and growing — base of consumer electronics devices that its subscribers can use to access the streaming service. Netflix streaming is available on the Xbox 360, PlayStation 3, and Nintendo Wii gaming consoles, Roku broadband set-top boxes, TiVo DVRs, and HDTVs and Blu-ray players from Samsung, LG, Vizio and other CE manufacturers. Altogether, Netflix expects to have the service available on more than 100 CE devices by the end of the year. It will take some time for Redbox to negotiate similar deals, and even longer to reach the kind of critical mass Netflix has already achieved.